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Investment Update: The Bright Spots in Bank Performance

Many U.S. banks are underperforming in the wake of COVID-19, but according to research from Forbes, there are a few “bright spots.” Forbes’s portfolio of nine stocks showed an average return of 11% in the last five trading days compared with a 13% return in the Dow during the same period.

The top 3 performers within the portfolio in the last five trading days were, Citigroup (15.1% return), Morgan Stanley (14.6% return), JPMorgan (14.4% return). On Friday, the top 3 performers were U.S Bancorp (-1.1% return), BNY Mellon (-1.4% return), State Street (-1.5% return).

Top performer Citigroup’s market cap has declined by $86.6 billion from about $178.5 billion on December 31, 2019 to $91.9 billion now. The company had $74.3 billion in revenue in 2019, from which it derived $19.4 billion in net income and $8.08 in earnings per share.

According to JPMorgan, stocks can bounce back, but it may not happen until 2021. According to Dubravko Lakos-Bujas, Chief U.S. Equity Strategist at JPMorgan, the S&P 500 can reach 3,400 in early 2021, as long as U.S. efforts to contain the coronavirus outbreak work. In a letter to clients, Lakos-Bujas wrote that he expects the S&P 500 to reach 3,400 in early 2021.

“Acknowledging that equity markets globally are now down 30-50% from their recent highs, and that investor positioning has become increasingly favorable, we see an asymmetrical return profile for equities with upside significantly higher than downside over the next year,” Lakos-Bujas wrote.

S&P Global Ratings believes the effects of the COVID-19 pandemic have likely pushed the world economy into recession, dragging full-year GDP global growth down to just 1-1.5%.

"We project China's economy to expand 2.7%-3.2%, and the eurozone economy to contract 0.5%-1.0% in 2020," they said in a statement.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.

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